Labour's Ed Balls: Bankers' bonus clawbacks should be extended to 10 years

The Labour Party has outlined plans to extend the current clawback period from seven to 10 years(Reuters)

The Labour Party wants to see bankers found guilty of misconduct having their bonus payments withdrawn from as far back as 10 years ago, extending the current seven year limit for clawing back payouts.

Labour's proposal is part of a series of reforms of the banking sector, ahead of the Tories plans for the economy to be unveiled next week.

Shadow Chancellor Ed Balls said: "We will extend to at least 10 years the period bank bonuses can be clawed back in cases of misconduct. As we have seen in recent days, wrongdoing can take years to uncover.

"The current proposals to claw back bonuses are too weak and do not cover a long enough period of time. We will ensure people involved in misbehaviour and misconduct would have to give back their bonuses for at least a decade after they have been paid out."

The Shadow Chancellor also promised a stricture that would force banks to publish the number of their employees earning more than £1m.

Balls also welcomed a Competition and Markets Authority inquiry into the lack of competition in banking, adding that he would like to see at least two new challenger banks entering the big ticket banking arena.

The clawback period for undeserved bonuses had stood at five years, and was extended to seven years at the beginning of this year. The latest fiasco at HSBC, and the time it has taken to come to light fully, have no doubt prompted Balls' recommendations.

A spokesman for the Conservatives pointed out that they have introduced "the toughest system of clawback and deferral of any financial centre in the world".

"A banking reform plan written by Ed Balls is like a fireworks safety guide written by Guy Fawkes - nobody will trust a word he says," he added.